Lecture 2 - Ethical Theories of Business Ethics

8/12/2019 Lecture 2 - Ethical Theories of Business Ethics

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Lecture 2:

Theories & Principles of Business Ethics

Business Ethics

BUS 4023


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Ethical Theories

Ethical theories are the rules and principles thatdetermine right and wrong for any given Situation concepts such as good and evil, right and wrong, virtueand vice, justice and crime, etc. Major branches of ethicsinclude:

1. Meta-ethics

2. Normative ethics

3. Applied ethics

4. Moral psychology - how moral capacity or moral

agency develops and what its nature is;5. Descriptive ethics - what moral values people

actually abide by.

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1. Meta-ethics

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Concerns the theoretical meaning of moralpropositions and how their truth values may be

determined.

Divided into cognitivism and non-cognitivism:-

a) Cognitivismis seen as the claim that when we talkabout right and wrong, we are talking about matters offact.

b) Non-cognitivismis the claim that when we judge

something as right or wrong, this is neither true norfalse. We may be only expressing our emotionalfeelings about these things.


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Cognitivism vs Non-Cognitivism

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COGNITIVISMthere are objective moral truthswhich can be known. Hence statements of moral

belief can be true or false

NON-COGNITIVISMobjective assessment of moraltruth is not possible. It is all subjective

Cognitive(moral judgements can

be known)

Non-cognitive(moral judgements cannot

be known)

META-ETHICS


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2. Normative Ethics

Ethical theories that propose to prescribe the morally

correct way of acting.

Categories:a) Consequentialist ethics:the moral judgment in

these theories is based on the intended outcomes, the

aims, or the goals of a certain action.

b) Non- Consequentialist ethics:start from reasoning

about the individuals rights and duties.


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2. Normative Ethics

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Motivation

/Principles Action Outcomes

Source: Crane & Matten (2004)

Non-consequentialism Consequentialism

Ethics of Duties (Deontology)

Ethics of Right & Justice

Utilitarianism

Hedonism/Egoism


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2. Normative Ethics

2.1 Non-consequentialism

a) Deontology

'Duty Based' Ethics

Argues that decisions should be made considering

the factors of one's duties and other's rights.

Deontologistsdeny that what ultimately matters is an

action's consequences.

They claim that what matters is the kind of action it is.

What matters is doing our duty.
http://en.wikipedia.org/wiki/Consequentialism


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Some deontological theoriesinclude:

Immanuel Kant's Categorical Imperative Kant claims that all our actions should be judged

according to a rule he calls the Categorical

Imperative.

First Version: "Act only according to that maxim [i.e.,

rule] whereby you can at the same time will that it

become a universal law.

Ms. Sheela often takes credit for the work done by hersubordinates

Second Version: "Act in such a way that you treat

humanity, whether in your own person or in theperson of another, always at the same time as an end

and never simply as a means."

Mr. Chua is trying to decide whether or not to choose aninterviewee based on physical characteristics. He mustask himself whether he will be willing to have an employerreject him based on his physical characteristics.

2. Normative Ethics
http://en.wikipedia.org/wiki/Consequentialismhttp://au.youtube.com/watch?v=79hOZdh4PkQ&feature=relatedhttp://en.wikipedia.org/wiki/Consequentialism


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John Locke - Natural rights are certain basic,

important, inalienable entitlements that should

be respected and protected in every singleaction-rights to life, freedom, and property.

Justice can be defined as the simultaneouslyfair treatment of individuals in a given situation

with the result that everybody gets what they

deserve

2. Normative Ethics

b) Ethics of Right & Justice


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The Concept of a Right

Right= an individuals entitlementto something.

Legal right= An entitlement that derives from a legal

system that permits or empowers a person to act in a

specified way or that requires others to act in certain ways

toward that person.

Moral (or human) rights= rights that all human beingseverywhere possess to an equal extent simply by virtue of

being human beings.

Legal rightsconfer entitlements only where the

particular legal system is in force. Moral rightsconfer entitlements to all persons

regardlessof their legal system.


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Rights & DutiesMoral rights / human rights:

Human beings of every nationality possess to anequal extent simply by virtue of being humanbeings.

All human beings are permitted/empowered to do

something (the right to get education) or areentitled to have something donefor them (theduty of the government to provide schools &universities).

Prohibitions/requirements on othersthat enablethe individual to pursue certain interests oractivities. Ie: the right not to be tortured.

These rights create duties of others towards an

individual.


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Rights & Duties

Moral Duties (moral judgments):

(1) Moral duties other people have toward thatperson (positive rights/must be done).

Ie: child-parents, consumer-company

(2) Provide individuals with autonomy andequality in the free pursuitof their interests.

(3) Justifying ones actions and for invoking theprotectionor aid of others (negative rights/must not be dome).

Ie: child-parents, consumer-company


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Aristotle (384322 B.C.) divided the

concept of justice into three types:

Distributive justice

Retributive justice

Compensatory justice

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2. Normative Ethics


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Distributive Justice

Divides benefits/burdens among individuals

Requires that equals be treated as equals

Question: what principle should govern thedistribution of benefits and burdens?

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Equality (egalitarians) Need

Effort Productivity

Ability

2. Normative Ethics


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Retributive Justice

Concerned with retribution or punishment when

someone has committed a crime or

a wrong-doing

The punishment must fit the crime

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2. Normative Ethics


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Compensatory Justice

Concerned with what kind of compensationsomeone should receive for a wrong done tohim or her

The compensation should be in proportion to thedamage someone has received

The greater the damage, the greater thecompensation should be

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2. Normative Ethics


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2. Normative Ethics

2.2 Consequentialism

c) Utilitarianism

Utilitarianism holds that an action is right if it leads to the most

happinessfor the greatest number of persons

The Basis of Utilitarianism: ask what has intrinsic value

and assess the consequences of an action in terms of

intrinsically valuable things.

Instrumental Value- a thing has only instrumental value if it

is only valuable for what it may get you, e.g., money

Intrinsic Value- a thing has intrinsic value if you value it for

itself,


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Utilitarianism

Actions and policies should be evaluatedon the basis of the benefits and coststheywill impose on society

Benefits (utilities):monetary, pleasures,health, lives, satisfactions, knowledge,happiness.

Costs:monetary, sickness, death,ignorance, unhappiness.


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UtilitarianismAn action is right from an ethical point of view if:

(1) Utilities: the sum total of utilitiesproduced by

an action is greater than the sum total of utilitiesproduced by any other act/s, provided theaction would be required by those moral rulesthat are correct. (Class attendance)

(2) Cost-Benefit Analysis: desirability of investingin a project depends on the present and futureeconomic benefits outweighingpresent andfuture economic costs. (Training &

Development)(3) Efficient: produces a desired outputwith the

lowest resource input, produces greatestbenefits at the lowest costs.(conservation,

maximisation)


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d) Hedonism/Egoism, which holds that an action is

right if it maximizespleasureamongst people.

Personal egoists: Pursue their own self-interest but donot make the universal claim that all individuals shoulddo the same.

Impersonal egoists: Claim that the pursuit of ones self-interest should motivate everyones behavior.

Egoists do not necessarily care only about pursuing

pleasure (hedonism) or behave dishonestly andmaliciously toward others.

Egoists can assist others if doing so promotes their ownadvantage.

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2. Normative ethics


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3. Applied Ethics

How do we take moral knowledgeand put it intopractice? Virtue, values, moral obligation

Concerns how moral outcomescan be achieved in

specific situations.Decision making

It argues that moral correctness evolves similarly to

scientific knowledge: socially over the course of many

lifetimes. Thus, we should prioritize social reform over

concern with consequences, individual virtue or duty

(although these may be worthwhile concerns, provided

social reform is also addressed).


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4. Moral Psychology

A field of study in both philosophy and psychology.

Moral behaviorsare typically the product of multiplelevels of moral functioning, energized by:

The "hotter" levels of intuition, emotion, and behavioral

virtue/vice. The "cooler" levels of values, reasoning, and willpower,

while still important, are proposed to be secondary .

The "Moral Foundations Theory" of psychologistJonathan Haidt examines the way morality variesbetween cultures and identifies five fundamental moralvalues shared to a greater or lesser degree by differentsocieties and individuals. According to Haidt, these are:care for others, fairness, loyalty, authority and purity.


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5. Descriptive Ethics

comparative ethics.

study of people's beliefs about morality.

a form of research into the attitudes of individuals

or groups of people.

aim is to uncover people's beliefs about such

things as values, which actions are right and

wrong, and which characteristics of moral agents are

virtuous.

investigate people's ethical ideals or what actions

societies condemn or punish in law or politics.


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Observers often note the moral and ethical diversitybetween individuals and human cultures, and point tothis diversity as supporting the theory that right andwrong are not absolute but relative.

Most commonly, morality is seen as relative to culture orrelative to each individual.

Throughout human history, it has not been possible tofind consensus on a single moral code.

This is often taken to support the thesis that morality is asocial construct


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Stages of Moral Development

Stage 1: Pre-conventional

1. Sticking to rules to avoid punishment

2. Following rules only when doing so is in yourimmediate interest. (Follow the rule, fulfill classattendance)

Stage 2: Conventional

3. Living up to what is expected by people close toyou. (Friends, parents)

4. Maintaining conventional order by fulfillingobligations to which you have agreed.


Kohlberg: Theory of moral development


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Stage 3: Principled

5. Valuing rights of others and upholding absolute

values and rights regardless of the opinion of themajority.

6. Following self chosen ethical principals even if they

violate the law (punctuality)



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Importance of Kohlbergs Theory:

Shows individuals can change or improve their moral

development Supports managements development of employees

moral principles

The best way to improve employees business ethics is

to provide training for cognitive moral development.



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6. Virtue Eth ics

Virtue Ethics- An ethics of virtue is based

on the idea that a morally right act insome situation that calls for a moral

decision is what a virtuous person would

do in that situation. There are certaincharacteristics which are virtues. People

possessing these virtues is what makes

one moral, one's actions are a reflection oftheir inner morality. Inherited.

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7. Ethics of Care

Emphasizes caring for the concrete well being of

those near us.

(1) Ethics need to be impartial. (fair,justice n equal)

(2) Emphasizes preserving and nurturing concrete

valuable relationships.Communitarian Ethics: communities and communalrelationships as having fundamental value that shouldbe preserved/maintained.

(3) Says we should care for those dependentonand related to us.


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Tak Nak


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Malaysian Context

The Malaysian government is spending

millions of ringgit every year creating

awareness on the Tak Nak campaign.

Adversely, there are numerous tobaccomanufacturers which have been allowed to

operate and sell their products in

Malaysia.Evaluate this scenario using ethics of

utilitarianism


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Review and Discussion Question

1. Explain the differences between the

Cognitivismand Non-Cognitivism.

2. Explain the differences between the

Consequentialismand Non-

Consequentialism Ethics.

3. Describe THREE (3)categories of justice.

4. Describe with explanations, Kohlberg's

stages of Moral Development with

examples.

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Lecture 2 - Ethical Theories of Business Ethics

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